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TMI Blog2016 (1) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... was adduced. There is no evidence of laundering of money, parking or to cover the differential cost of other imports or any unlawful activities unearthed on the part of appellants. This also makes the case of the appellant strong that the value declared by them is solely for the purpose of remittance towards the import of rough diamonds. There is no mis-declaration of the value of the rough diamonds in question - since mis-declaration of value is not established. It is not required to consider whether the mis-declaration of value would render the goods as 'prohibited goods'. - Confiscation and penalty set aside - Decided in favor of appellants. - Appeal No. C/301 to 312/09-MUM - - - Dated:- 17-12-2015 - P. S. Pruthi, Member (T) And Ramesh Nair, Member (J) For the Appellant : Shri V S Nankani, Sr. Adv. Shri Prithviraj Chaudhary, Adv. and Shri J C Patel, Adv For the Respondent : Shri K M Mondal, Spl. Counsel ORDER Per Ramesh Nair These appeals are directed against the order-in-original No. COMMR/ TKG /ADJN /20 /2008-09 dated 30/12/2008 passed by the Commissioner of Customs, CSI Airport, Mumbai. 2. The brief facts of the case are as follows- 2.1 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dresses on 16.6.2003. In response, only M/s. Rainbow Expotrade Pvt. Ltd., had informed the DRI, that they were not in any way concerned with the said four consignments of rough diamonds arrived in their name and hence they had not filed the Bill of Entry for clearance of the said goods but M/s Raj. Gems Pvt. Ltd. had not replied at all. On 18.6.2003, under a Panchnama, the examination of the aforesaid 7 consignments were done by Customs and the expert panel nominated by the GJEPC in presence of DRI officers. After examination it was found that these consignments are highly overvalued. The value ascertained was as follows:- Sr.No. Name of the importer No. of consignments Quantity in carats Import Value (in Rs.) Value ascertained by Trade Panel (GJEPC (in Rs.) 1 M/s. Rainbow Expotrade Pvt. Ltd. 05 308164 23,44,40,143.00 1,15,36,716.00 2 M/s. Raj Gems Pvt. Ltd. 05 184197.65 24,42,06,139.95 1,10,17,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuance of this order, the adjudication was carried out de-novo. After hearing the appellants, the impugned order was passed. By the impugned order the Commissioner has held that the rough diamonds imported by the Appellants were mis-declared and he determined the value under Rule 8 of the Customs Valuations Rule, 1988 on the basis of value given by the expert panel of Gems and Jewellery Export Promotion Council (GJEPC) which was much lower than the declared value. The Commissioner held that even where no Bill of Entry was filed by the appellants in respect of the rough diamonds, they had mis-declared the value. He ordered absolute confiscation of the consignments of rough diamonds imported in the name of M/s. Rainbow Expotrade Pvt. Ltd., M/s. Raj Gems Pvt. Ltd., M/s Madhur Gems Pvt. Ltd. and M/s. Anuj Exports, and imposed personal penalties on the directors of these companies and proprietor of M/s. Anuj Exports. It was held that although the import of rough diamonds does not require any license and attract NIL rate of duty, their highly inflated import prices do facilitate illegal outflow of the foreign exchange which is invariably used in dubious activities and commission of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29264.59 36623171.00 2130014.24 5 24/2003 dt 09.05.2003 29898.06 37415927.00 4902903.00 Total Value 244206139.00 11017371.81 (C) IMPORTER M/S. SUNDARAM GEMS PVT. LTD. Sr. NO. Invoice No. date/Bill of Entry No. and date Quantity (in carats) Declared value (in Indian Value determined (in Indian Rs.) 1 101475 dt 26.05.03 21663.45 34840937.00 17429520.00 (D) IMPORTER M/S. MADHUR GEMS PVT. LTD. Sr. NO. Invoice No. date/Bill of Entry No. and date Quantity (in carats) Declared value (in Indian Value determined (in Indian Rs.) 1 DC-197/0503 DT. 14.05.2003 44494.67 3917167 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gems Pvt. Ltd., under Section 112(a) of the Customs Act, 1962. (x) I impose personal penalty of ₹ 15,00,000/- (Rupees Fifteen Lakhs) on Shri Nitin Shah, Director, M/s Raj Gems Pvt. Ltd., under Section 112(a) of the Customs Act,1962. (xi) I impose personal penalty of ₹ 40,00,000/- (Rupees Forty Lakhs) on Shri Uttamchand Jain, Director, M/s Sundaram Gems Pvt. Ltd., under Section 112(a) of the Customs Act, 1962. (xii) I impose personal penalty of ₹ 20,00,000/- (Rupees twenty lakhs) on Shri Bhanwarlal Jain, Director M/s Sundaram Gems Pvt Ltd. under Section 112010 the Customs Act, 1962. (xiii) I impose personal penalty of ₹ 20,00,000/- (Rupees twenty lakhs) on Shri Sampatraj Jain, Director, M/s Madhur Gems Pvt. Ltd., under Section 112(a) of the Customs Act,1962. (xiv) I impose personal penalty of ₹ 20,00,000/- (Rupees twenty lakhs) on Shri Ravi Choradia, proprietor, M/s Anuj Exports Pvt. Ltd. under Section 112(a) of the Customs Act, 1962. 2.9 Aggrieved by the same, these appeals were filed by the appellants. 2.10 On account of this difference of opinion, the matter was referred by the President, CESTAT to a third member. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dt. 01.03.2002. Upon the goods being detained by DRI on account of issue of valuation, the appellants took up the matter with the suppliers who offered to take back the goods in view of the dispute of valuation. There were inconsistencies in the statements of the different panel members. The learned Commissioner had wrongly observed that there was a unanimous decision of the panel members. The constitution of the panel and the qualifications of the panel members are questionable. It was further submitted that as the valuation report submitted by the panel of member is not reliable, therefore, the goods are not liable for confiscation under Section 111(d) and (m) of the Customs Act,1962. It was also submitted that as rough diamonds are freely importable without a license and the same were totally exempt from duty, the question of imposition of penalty under Section 112 of the Act, does not arise. The decisions of this Tribunal in the case of Sahil Diamonds vs. CC -2010 (257) ELT 310 (Tri-Ahmd.) which was affirmed by the Hon'ble Supreme Court as reported in 2010 (257) A 22 (SC) was relied upon. He also relied on the decision in the case of Mahalaxmi Gems v. CC 2008 (231) ELT 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Aazadi Bachao Andholan [2004 (10)SCC 1] (iii) Associated Cement Co vs. Collector [2001 (128) ELT 21] (iv) Eicher Tractors Ltd. vs. Commissioner of Customs, Mumbai [ 2000 (122) ELT 321 (S.C.)] (v) Commissioner of Customs vs. Frontline Printers Ltd [2007 (211) ELT 545] (vi) Commissioner of Customs vs. Deval Enterprises [2007 (209) ELT 378)] (vii) Gujarat Ambuja Exports Limited vs. Commissioner [2008 (222) ELT 427] (viii) Commissioner of Customs vs. Mahalaxmi Gems [2002 (144) ELT 548 (Tri) Hon'ble Supreme Court affirmed the said decision reported in [2008(231) ELT 198 (SC)] (ix) Hargovind Das K. Joshi vs. Collector [1992 (61) ELT 172 (S.C.)] (x) Suraj Diamonds vs. Commissioner of Customs [2008 (86) ELT 400] (xi) Wooltex Associates vs. Commissioner of Customs [1998 (90) ELT 245 (Tri)] (xii) Sij Electronics Comp. Tech. Pvt. Ltd. vs. Commission of Customs, Kochi [2001 (129) ELT 528 (Tri.Bang)] (xiii) Siris Aqua Ltd. vs. Commissioner of Central Excise, Hyderabad [2000 (15) ELT 186 (Tri)] (xiv) C.C. (Imports), Mumbai vs. R.A. Spinning Mills (P) Ltd. [2004 (171) ELT 54 (Tri-Mumbai)] (xv) Shroff vs. CIT (Jt. Commr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 273 (T)] (vii) Naveen Jain vs. CC [2001(134) ELT 32 (Del)] (viii) Sagar Impex vs. CC (Airport), Mumbai [2006 (193) ELT 289 (T)] (ix) Shree Tirupati Plastic vs. CC [1989 (41) ELT 512 (T)] (x) Malaysia Arcade Agencies vs. C.C. Cochin [2004 (173) ELT 55 (T)] (xi) Board Circular No. 53/2003-Cus dated 23/6/2003. (xii) CC (Sea), Chennai -I, Vs. Baburam Premchand [2015(315) ELT 348 (Mad)] (xiii) CC CE, Delhi - IV vs. Achiever International [2012(286) ELT 180 (Del)] (xiv) CCE, Ahmedabad vs. Ramesh Food Products [2004 (174) ELT 310 (SC)] (xv) Qazi Shabbir Mustafa vs. CC., Mumbai [2004 (176) ELT 227 (T)] 6. We have carefully considered the submissions made by the Appellants as well as by the revenue and also perused the records. Broadly, the following issues arise in the instant case for determination - (a) Whether the allegation of mis-declaration of value is sustainable? (b) Whether the imported rough diamonds are liable to confiscation under the Customs Act, 1962? (c) Whether the Directors are liable for penalty under the Customs Act, 1962? 6.1 In the present case, DRI seized the consignment of rough diamonds on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion whereas Shri. Rupen Kothari stated that all members were not present at the same time and only some were present. As regard country of origin of the diamonds Shri. Dilip Lakhi has stated that the valuation was done on the basis of country of origin of diamonds. Shri. Amrish Parikh stated that country of origin was ascertained but that is not important for arriving at the correct value. Shri. Mehul Shah stated that country of origin was verified from the invoice. Shri. Sudhir Mehta stated that country of origin makes very small difference to the value and that he found out country of origin by looking at the diamonds. Shri. Rupen Kothari has stated that country of origin makes no difference to the value and that the country of origin was not ascertained. Shri. Nilesh Shah has stated that they asked the country of origin but they were not told about that. Therefore in view of above inconsistent stand taken by different members of the panel there is no unanimity on the issue whether the country of origin is relevant to the value of rough diamonds or otherwise. As regard the method of valuation also there is inconsistencies, Shri. Dilip Lakhi has stated that value of each lot was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inconsistencies in the version of the members of the expert panel and moreover the report was not signed by all the members of the expert panel. In light of above serious discrepancies, the valuation report given by the panel of GJEPC cannot be considered as reliable and on the basis of such discrepant report valuation of rough diamonds arrived at is not acceptable. In the impugned order the Ld. Adjudicating authority has heavily relied upon the valuation report of GJEPC and since the same is under serious doubt due to various discrepancies as stated above the whole foundation of valuation made out in the show cause notice gets demolished. 6.2 We find that as per the standing orders issued by the Commissioner of Customs Airport which are amended from time to time and which give list of names of experts to whom reference is to be made, in the present case the panel of members has not been constituted in accordance with such standing orders. We do not find any explanation given as why in the present case the panel was not constituted in accordance with such standing orders. Therefore in defiance of the standing order the members of expert panel who examined the diamonds in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction value has to be accepted until and unless it is shown by some contemporaneous evidence that the price declared in the invoice was not the correct price. 9. The Appeal is accordingly dismissed. Parties shall bear their own costs. We find that the facts of the above case are similar to the facts in present case. In the present case also there is no evidence that the invoice issued by supplier are either fake or fabricated or that there exist any relationship between supplier and the importer. In the given fact Hon'ble Apex Court accepted the transaction value therefore the above decision is squarely applicable to the present case. 6.3 In another case on the similar issue decided by this Tribunal in the case of Sahil Diamonds (supra) which was affirmed by Hon'ble Apex Court as reported in [2010 (257) ELT A22 (SC)].In the said judgment Hon'ble Tribunal given following findings: 19. We also take note of the various discrepancies pointed out by the appellant in the report of the two subsequent panels. As per factual position, there are six consignments (packages) and each consignment consisted of several sub-packages. The report dated 10-6-03 accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute, has observed that in the absence of any cogent evidence, enhancement of the value of the rough diamonds based upon the panel consisting of employees of the department and members of the diamond trade, cannot be resorted to. For better appreciation, we reproduce Para 3 of the said judgment. 3. It is debatable whether the members of the diamond trade would be independent witnesses with regard to the valuation of goods imported by another member of the same trade. In such matter one cannot overlook the fact of competition among these members and expect a member of the panel to rise above such consideration taken impartially. It is however, not necessary for us to rest our decision upon the tack of impartiality of this panel. The fact remains that the value of the goods that was declared was the transaction value. The genuineness of the invoice that the appellant produced has not been questioned. It has not been alleged that it was fabricated or fake or that any relationship between the importer and the exporter. Applying the ratio of the Supreme Court's judgment in Eicher Tractors Ltd. v. CC - 2000 (122) E.L.T. 321, the transaction value would have to be accepted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate Scheme was adopted in a Ministerial meeting held at Interlaken, Switzerland, on 05th November, 2002. India is a signatory to the undertaken Declaration. The scheme has been evolved to deal with the issue of conflict diamonds which are basically rough diamonds whose trade is prohibited by the United Nations Security Council, because the proceeds of that trade are used by rebel movements and their allies to finance conflicts aimed at undermining legitimate governments. 22.2 KP certificate is a forgery resistant document with a particular format which identifies a shipment of rough diamonds as being in compliance with the requirements of Certification Scheme (i.e. KPCS). The KP certificate inter alia contains the details of country of origin, the certificate number, date of issuance, date of expiry, issuing authority, the details of importer and exporter, carat weight/mass, value in US $, number of parcels in shipments, relevant HS code and validation of certificate by the exporting authority. It may also have additional details such as quality, characteristics of rough diamonds in the shipment etc. 22.3 In order to comply with the requirements of KPCS, each sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Suraj Diamonds (India) Ltd . v. CC (Airport) Mumbai, 2008 (227) E.L.T. 471 (Tribunal) = 2008 (86) RLT 400 wherein Tribunal by taking note of the precedent decisions in case of M/s. Nalakath Spices Trading Co., 2007 (213) E.L.T. 283 (Tribunal) = 2007 (80) RLT 797 (CESTAT-Bang.), Shree Subhadra Industries v. CCE Chennai, 2001 (137) E.L.T. 1405 (Tri.-Chennai) and M/s. Jay AR Enterprises, 2007 (210) E.L.T. 459 (Tribunal) = 2007 (79) RLT 291 (CESTAT-Chennai) has held that inasmuch as import of rough diamonds were exempted from payment of duty and were not dutiable, no penalty can be imposed under the provisions of Section 112 of the Customs Act, 1962. By following the above decision of the Tribunal, we hold that no penalty is imposable upon any of the appellant. In any case, having held that the value as declared by the appellant was correct value, imposition of penalties upon them is not justified. The same is, accordingly, set aside. 27. In the nutshell, the importers are allowed to re-export the diamonds. Penalties imposed upon them are set aside. All the appeals are allowed in above terms. From the above judgments it is seen that facts are more or less identical as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds being accompanied by a KPC flows from Chapter 2 of the Foreign Trade Policy and it is not a document prescribed under the Customs Act, 1962. The department could not show any provision under the Customs Act, 1962, which prescribes submission of KPC as a declaration by the importer. Moreover, the Appellants were not the owner of the goods. It is seen that the case of the respondent is that the Appellant Companies had made applications to the GJEPC for validation of the KPC received from the overseas supplier required for the import of rough diamonds. It is undisputed that thereafter, neither the appellants claimed ownership over the goods, nor paid to the supplier, nor did they file a bill of entry. Moreover, where no Bill of Entry is filed, there is no declaration of value in terms of Sec. 14 of the Act. The Hon'ble Supreme Court of India in the case of Commissioner of Customs, Calcutta vs. South India Television (P) Ltd., 2007 (214) E.L.T. 3 (S.C.) observed that - 6. . Under Section 2(41) of the Customs Act, the word value is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be convicted of attempted arson, however clearly it may be proved that he intended to set fire to a haystack at the time of the purchase. Nor can he be convicted of this offence if he approaches the stack with the matches in his pocket, but if he bends down near the stack and lights a match which he extinguishes on perceiving that he is being watched, he may be guilty of an attempt to burn it. It was further held that the test for determining whether the act of the accused person constituted an attempt or preparation is whether the overt acts already done are such that if the offender changes his mind and does not proceed further in its progress, the acts already done would be completely harmless. In (1970) 72 Born. LR 575, Yusuf Abdulla Patel v. R.N. Shukla, it was held that a person commits the offence or attempt to commit a crime when, with the intention of commiting that crime, he does an act or acts which constitute a direct movement towards its commission, but the actual commission of the crime is frustrated by reason of the fact that it is interrupted by circumstances independent of his volition. Such act need not, however, be penultimate act towards the commission of cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s argument. The declarations given to satisfy the requirements of s. 12(1) though they do not correctly furnish all the information asked for in the form. Such declarations cannot be considered as non-est. 6.8 Heavy reliance was placed by the Department on the decision of the Tribunal in the case ofPrakash Sancheti vs. Commissioner of Customs, Ahmedabad (2013 (292) ELT 273 (Tri-Ahmd.), which has been stayed till disposal of the appeal admitted there against by Hon'ble Gujarat High Court vide its order 20.06.2013 in Civil Application no. 544 of 2011 in Appeal No. 1236 of 2011. It is seen that the aforesaid decisions of the Hon'ble Supreme Court were not brought to the notice of the Tribunal. Moreover, in the said decision in Prakash Sancheti(supra) the importer had confessed his participation in the process of overvaluation and had also got the KPC revised to a much lower amount, while owning up that the original KPC was filed inadvertently. The importer also amended its Import General Manifest. It is settled law as had been held by the Hon'ble Supreme Court in Municipal Corporation of Delhi vs. Gurnam Kaur, 1989 AIR SC 38, that any judgment passed in sub silentio c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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